The procedure described below has been followed with regard to the investigations:

i. The Designated Authority (hereinafter referred to as Authority), under the Rules received written application from M/a Hardillia Unimers Ltd., on behalf of the domestic industry, alleging dumping of EPDM Rubber, originating in or exported from Japan;

ii. The Authority on the basis of sufficient evidence submitted by the petitioner, decided to initiate dumping investigations against imports of EFDM Rubber from Japan The Authority notified the Embassy of Japan about the receipt of dumping allegation before proceeding to initiate the investigations in accordance with sub-rule 5(5) of the Rules;

iii. The Authority issued a public notice dated 20^th May, 1998 published in the Gazette of India Extraordinary, initiating anti-dumping investigations concerning imports of EPDM Rubber, classified under custom sub-headings 4002.70 of Schedule I of the Customs Tariff Act. 1975, originating in or exported from Japan;

iv. The Authority forwarded a copy of the public notice to the known exporters from Japan (whose detail? v»era made available by the petitioner) and industry associations in India and gave them an opportunity to make their views known in writing in accordance with the rule 8(2);

v. The Authority forwarded a copy of the public notice to the known importers of EPDM Rubber in India and advised them to make their views known in writing within forty days from the date of the latter;

vi. Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of EPDM Rubber for the past three years, including the period of investigations. No information was however, received from CBEC;

vii. The Authority provided a copy of the petition to the known exporters, from Japan and the Embassy of Japan in accordance with rules 6(3) supra;

viii. The Authority sent questionnaire, to elicit relevant information, to the following exporters from of the subject goods, in accordance with the rules 6(4);

a) Japan Synthetic Rubber Co Japan, now known 83 JSR Corpn. and

hereinafter referred to as JSR also;

ix. The Embassy of the subject country in New Delhi was informed about the initiation of the investigations in accordance with rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire within the prescribed lime. A copy of the latter, petition and questionnaire sent to the exporter was also sent to the Embassy. Along with a list of known exporter(s) /producer (s);

x. A questionnaire was sent to a number of known Importers of EPDM Rubber in India calling for necessary information in accordance with rule 6(4):

xi. Additional information regarding injury was sought from the petitioner, which was also received;

xii. The Authority made available non-confidential version of the evidence presented by various interested parties in the form of a public file kept open for inspection by the interested parties:

xiii. Cost investigations ware also conducted lo work out optimum cost of production and cost to make and sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and the information furnished by the petitioner so as -to ascertain if anti- dumping duty lower than the dumping margin would be sufficient to remove injury to the domestic industry;

xiv Investigations was carried out for the period from starting 1^st April 1996 to 30^th Sept., 1997 (18 months).

B. VIEWS EXPRESESSED BY PETITIONER, EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES AND EXAMINATION BY AUTHORITY

2. The submissions made by the petitioner, exporters, Importers, and other Interested parties have been brought out. examined, considered and have bean dealt at appropriate places in this notification.

3. The product under consideration in the present investigations is EPDM Rubber of all forma/grades/purities. EPDM Rubber is classified under custom sub-heading 4002.70 of Schedule 1 of the Customs Tariff Art, 1975. EPDM is classified under sub-heading no. 4002.7009 under the Harmonised International Trade Classification system and is different from polyhutadiene classified under ITC sub heading no. 4002.70 01

4. EPDM is a synthetic polymer of ethylene propylene and diene. EPDM is produced by solution polymerization. EPDM provide better ozone and thermal resistance and is mainly used in automative applications such as profiles, radiators, hoses and seals; in building and construction as profiles, roofing foils and seals; in cable and wire as cable insulation and jacketing and in applications as a wide variety of mostly in moulded article.

5. The manufacturing process, functions & uses and custom classification indicated above are, however, indicative only and are in no way binding on the scope of the present investigations.

6. In order to examine whether the EPDM Rubber produced by the domestic industry is a like article to the EPDM Rubber exported from Japan. characteristics such as physical characteristics (size, chemical composition, raw material), manufacturing process and technology, functions and uses. product specifications, pricing, distribution and marketing and tariff classification of the goods have been considered.

7. It has been argued by DSM that there is a variety or different technologies to produce EPDM, which result in a variation to e certain degree in the EPDM produced. One of the difference that arises is the quality of the goods produced. Further, it has been argued by the exporter that EPDM is not comparable to NBR as the manufacturing process of NBR is less complex than EPDM Change In EPDM of different producers requires changes In the recipe, falling which the finished product will show different physical property.

8. The Authority notes that the only difference pointed out by the exporter is with regard to the technology to producer EPDM by different producers. The Authority notes that there is implied acceptance by the exporter that the goods imported from the subject country can tie substituted with the goods produced by the domestic industry. Even if the argument of the exporter is accepted that there may be some difference in quality (though the argument is unsubstantiated and deserves to be ignored on this ground along), difference in quality does not imply that the two goods are not interchangeable. Mere difference in quality calls for adjustments for the purpose of fair comparison No price adjustment is, however, feasible under the present circumstances in view of unqualified claim. The Authority therefore, holes that the goads exported from Japan and goods produced by the petitioner have characteristics closely resembling each other and the two are technically and commercially substitutable. The goods produced by the domestic industry are a like article to the goods exported from Japan within the meaning of the Rule 2(d).

9. The petition has been med by M/S. Herdillia Unimers Ltd. There is no dispute that there is no other producer of EPDM Rubber In India. The petitioner, therefore, satisfies the standing to tile the present petition and constitutes domestic industry in accordance with Rule 2{b) supra.

Provided that in the case of Import of the article from a country other than the country of origin and where the article has been merely transshipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall he determined with reference to its price in the country of origin.

11. The Authority provided opportunity to the known exporters from Japan to furnish information relevant to the investigations and offer comments, if any in accordance with the Section cited above. The to flowing exporters responded;

a) JSR Corpn., Japan;

12. Since the subject goods are produced only by JSR Corpn. and DSM, separate dumping margins in respect of these exporters have been determined on the basis of the information furnished by the exporters and the same is discussed herein below. Separate dumping margin in reaped of other exporters who have furnished information but who do not produce EPDM are not been assessed separately.

13. Normal Value: The exporter has derived the Bailing price by adding the deductions to the ex-factory price. The Authority notes that the exporter was required to furnish the details of the price at which goods have been sold in the home market The selling price should have been determined on the basis of the price arrived from the sales made in the home market The Authority has, however, accepted the claim made by the exporter for the purpose of preliminary determination, pending further investigations The normal value conies to US $ **** pmt.

14. Export Price: The export price has been claimed on the basis of average CIF export price of the subject goods to India. The exporter has claimed adjutants on account of ocean freight, insurance, interest on payment, commission to the Japanese Trading house and Indian trading house. Some of these expenses are not incurred by the exporters and are borne by the trading companies. However, since these trading companies have also furnished necessary Information, the Authority considers it appropriate to allow these adjustments for the purpose of preliminary determination, pending further investigations. The export price comes to US $ *** pmt

15. Normal Value: The exporter has claimed Normal value on the basis of an average of selling price to customers in domestic market. The exporter has claimed adjustments on account of inland freight, storage and handling charges, No explanation has bean provided by the company with regard to the nature of expenses involved in account of storage. The Authority, therefore, considers is appropriate to disallow the claim on account of storage for the purpose of preliminary determination, pending further investigations. The average normal value comes to US $ ****.

16. Export Price. The exporter has claimed export price on the basis of an average of selling price to customers in India. The exporter hat claimed adjustments on account of inland freight, storage, handling, overseas freight and insurance charges. No explanation has bean provided by the company with regard to the nature of expenses involved an account of storage The Authority, therefore considers is appropriate to disallow the claim on account of storage for the purpose of preliminary determination, pending further investigations..

17. The Authority notes that though tee exporter has accepted the claim of the petitioner that there is extra packing involved in case of exports to India, yet no information with regard to the price adjustment has been furnished by the company.

18. The exporter hat not claimed any adjustment on account of commission. No evidence has been furnished by the exporter that the goods have been sold by the exporter directly to the customers in India and sales did not involve any payment of commission, even though the petitioner has alleged that sales are made through traders. The Authority, therefore, considers it appropriate to provide for commissions to the traders at the same rate as has been disclosed by JSR Corpn. Further, the exporter has claimed ocean freight incurred by the company on this account. Comparison of ocean freight incurred by JSR with the expenditure incurred by the company reveals that the ocean freight claimed by the company is significantly lower then the ocean freight claimed by JSR. In view of the fact that ocean freight for the same product and same country is not expected to be significantly different from company to company and in view of the fact that no evidence furnished by the exporter with regard to the adjustment claimed by it, the Authority considers it appropriate to provide for adjustment on this account on the basis of claims made by JSR. The average export price thus comes to US$ **** pmt.

"While arriving a1 margin of dumping, the designated authority shall make a fair comparison between the export price and the normal value. The comparison shall be made at the same level of trade, normally at ex-works level, and in respect of sales made at as nearly possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale taxation, levels Of trade, quantities. physical characteristics, and any other differences which are demonstrated to affect price comparability "

20. For the purpose of Fair comparison between the normal value and the export price, the Authority has considered taking into account the information furnished by the exporters, and other published information available with the Authority. The normal value and export price determined, as detailed above, are at ex-works level and therefore, the comparison of normal value with weighted average export price has been considered.

22. Under Rule 11 supra, Annexure-ll, when a finding of Injury is arrived at, such finding shall involve determination of the injury lo the domestic industry, "...taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles....". In considering the effect of the dumped imports on prices, It Is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article In India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

23. For the examination of the Impact of the imports on the domestic industry in India, we may consider such indices having a bearing on the stale of the industry as production, capacity utilisation, sales quantum, a took, profitability, net sales realisation, the magnitude and margin of dumping, etc. in accordance with Annexure II (iv) of the rules supra.

(a) Volume and Market share of Dumped imports: Imports of EPDM Rubber from Japan increased in absolute terms and relative to total imports in India as also consumption of EPDM in India. The petitioner started commercial production from 1.4.1993 and there was no other producer before that, in spite of which the imports from Japan have increased in absolute terms, relative to total imparts in India as also relative lo consumption in India.

(b) Production Sales and Capacity Utilisation: The petitioner started commercial production of the subject goods from 1.4.1993. The production of the petitioner Increased from 2194 MT in 1994-95 to 3625 MT in 1996-97 and was 4573 MT in the period of investigation, increase in production resulted in increase in the capacity utilisation also. Sales in absolute volumes also increased from 2305 MT in 1994-95 to 3062 MT in 1996-97 and were 4711 MT in the period of investigation. However, increase in production, sales and capacity utilisation have to be viewed in the light of the fact that the petitioner started commercial production only from 1.4.1993.

(c) Average Sales Realisation: Average net unit sales realisation of the domestic industry increased from Re 84.1 per kg. (1994-95) to Rs. 88.65 in the period of investigation. Though the unit sales realisation of the domestic industry increased over the period, yet the same was significantly below the cost of production, resulting in financial losses to the domestic industry.

(d) Stocks: Stock of EPDM Rubber with the domestic industry increased from 216 MT (1994-95) to 441 MT (1995-96) Though the same declined to 367 MT in 1996-97, yet the same was higher than the stocks at the end of 1994-95.

(e) Price suppression/depression: The imports were depressing the prices of EDPM Rubber ;n India to a significant degree and forced to the domestic industry to sell the Rubber at prices significantly below its cost of production.

(f) Profit/Loss: The domestic industry was selling EPDM Rubber significantly below its coat of production, resulting in tosses. Though the cost of production of the domestic industry declined and selling prices increased over the period resulting in decline In the losses per unit of production, yet the domestic industry was suffering severe financial losses from sales of EPDM Rubber.

(g) Conclusion on injury: The imports of EPDM Rubber from Japan increased in absolute terms.

25. It is seen the domestic industry has suffered material injury from dumped imports In establishing that the material injury to the domestic industry has been caused by the imports from the subject countries, the Authority holds (hat increase in market share of Japan and exports from Japan significantly below the cost of production forced to the domestic industry to sell at un remunerative prices, resulting in financial losses to the domestic industry.

26. The purpose of anti dumping duties, in general, is to eliminate dumping, which is causing Injury to the domestic industry and to re-establish a situation of open and fair competition in the Indian market, which is In the general interest of the country.

27. It is recognized that the imposition of anti dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition on the Indian market will not be reduced by the anti dumping measures, particularly if the levy of the anti dumping duly is restricted to an amount necessary to repress the injury to the domestic Industry. On the contrary, imposition of anti dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of EPDM Rubber Imposition of anti dumping measures would not restrict imports from the subject country In any way, and therefore, would not affect the availability of the product to the consumers.

28. To ascertain the extant of Anti-dumping duty necessary to remove the injury to the domestic industry, the Authority has relied upon reasonable selling price of EPDM Rubber in India for the domestic industry, by considering the optimum cost of production for the domestic industry.

29. The landed value has been determined on the basis of weighted average export price of EPDM Rubber from Japan, determined separately for the two exporters as described in the para relating to dumping, after adding the prevailing level of customs duties and one percent towards landing charges

31. It is considered necessary to impose anti dumping duty, provisionally, pending final determination, on all imports of EPDM Rubber originating in or exported from the subject country, pending investigations.

32. It was considered whether a duty lower than the dumping margin would be sufficient to remove the injury. Landed prices of the imports for individual exporters, for the purpose, was compared with the fair selling price of the domestic industry, determined for the period of investigations Wherever the difference was less than the dumping margin, a duty lower than the dumping margin is recommended. Accordingly, it is proposed that provisional anti dumping duties be imposed, from the date of notification to be issued in this regard by the Central Government, on all Imports of EPDM Rubber originating in or exported From Japan falling under Chapter 40 of the Customs Tariff. pending final determination. The anti-dumping duty shall be the difference between the amounts mentioned in column 3 be law and the landed price or imports per kg.

34. The following procedure would be followed subsequent to notifying the preliminary findings: